Welcome to the Prada Group Capital Markets Day. We are delighted to welcome you to Fondazione Prada. A few points before we start. Government guidance has been strictly followed for this event. Additionally, all speakers have been tested this morning and will present without a mask. We do however ask audience to always remain with face covers. This event will be recorded and broadcasted via web streaming. Simultaneous translation is available. It's channel 1 for Italian and channel 2 for English. Lastly, following the guidance of Greener Roadshows to decarbonize investor relations activities, we are pleased to announce that our event will be certified as carbon neutral under PAS 2060 certification. Mr. Bertelli, the floor is yours. Thank you. Good afternoon, everyone, and welcome to the Prada Group's Capital Markets Day. It is a great pleasure to see you in person, and I wish to thank also our guests who are connecting in through our webcast. In the next two hours, we're going to talk about the luxury market and the development of the Prada Group in the next few years. As soon as we finish our presentation, we will have time for your questions. I'd like to start with some comments on the evolution of the luxury markets, and then we'll talk about recent and future developments of the Prada Group. COVID has accelerated the evolution of the luxury market. In the last few years, the luxury market has been going through a major evolution, and some trends have been accelerated by pandemics. Younger clients, Gen Y and Gen Z, keep driving our growth. These generations are going to account for more than 70% of the market by 2025. In these last few years, the market has changed quite a few paradigms. Physical stores are not the only way and place where people shop. What people look for in luxury products in terms of values are not just status symbol or exclusivity features. Prada, in line with these needs, is now offering excellence and uniqueness of style, an experience that embraces the brand's values over and beyond sales activities. COVID has really pushed local consumption. As soon as tourism will be back, it will become accretive without penalizing domestic expenditure. In this last period, online sales have been increasing, and we have marked greater integration between physical and digital. New success factors are emerging, so today we do have new factors to successfully compete on the luxury market. Prada has improved relationships with its customers through constant dialogue, and we have strengthened our cultural relevance by means of bringing sustainability and social responsibility in the whole value chain and in the relationship with our customers. The growth of local consumption required us to be agile and reactive to meet the needs of our clients quickly and effectively everywhere in the world. It's going to be fundamental to keep focusing on local customers without losing sight of international tourism. The actions that the Prada Group decided to implement to accommodate change is what follows. We have increased the product content in terms of quality and uniqueness. We have adapted pricing accordingly. We have eliminated markdowns with strength and control of our distribution. We have developed a fully integrated e-commerce platform, fully integrated with the retail channel. We have invested in the industrial supply chain and streamlined our processes. We have invested in communication and distinctive initiatives for the group and its brands. We have increased our focus on sustainability and invested in human resources and new talent. All those actions have delivered the following results. In 2021, retail revenue is well above the levels of 2019. Full price sales account for almost 100% of retail revenue. The gross margin is steadily above 76%. Online penetration stands at 7% of retail revenues. Retail network productivity is above 2019 levels. The EBIT margin is higher than in 2019, and we have strong cash flow generation, and the net financial position is virtually down to zero. Let me now come to the Prada Group's main values. Prada aims at being the key player in changing consumption in the planet for people and for culture. Those values include rethinking processes, innovating heritage, and a spirit of excellence, uniqueness of talent, reaching beyond boundaries, and implementing sustainable paths. Pradeness is fundamental for us. Let's look at the drivers of growth. These are the five main drivers on which we base our future strategy. It is a matter of continuing consistently along the pathway we have already started on and keep prioritizing the value of our brands over the long term. At the basis of those drivers, we have investments in both people and infrastructure. Our main drivers are a distinctive vision and identity, style, quality and product uniqueness, focus on direct distribution, vertical integration and industrial know-how, and commitment to sustainability. Let's look at our distinctive vision and identity. Our growth will depend mainly on the group's ability to keep a distinctive vision and identity, which we have summarized in this sentence. The Prada Group has a thoughtful and pioneering vision of fashion. At a time of significant cultural and societal change, like the ones we're going through now, luxury needs to continue evolving coherently with the market. Dialogues and fluid perspectives continually allow us to reinterpret luxury. By being relevant, sustainable, and impactful, we will drive long-term growth. Design, quality and product uniqueness. Thinking of the collections, structure, we will continue to increase the value of our products in terms of style, quality, and uniqueness. We will pursue balanced growth across product categories. We will maintain a broad price architecture and continue to increase average price. We focus on direct distribution, so the third driver is distribution. Here we will continue to prioritize our focus on the retail and direct online channels for better customer experience. We will increase the productivity of the stores network. We will expand selectively in those markets that have higher potential and lower penetration today, and we will double online penetration and deliver superior omnichannel journeys. In vertical integration and know-how, we believe we stand in a very strong position, thanks to the investment we've made in both companies and people ever since the 1990s. We will continue through consolidation and further investments in vertical integration of the supply chain, rationalization of production, improved process control and product excellence, further time to market reduction and state-of-the-art and sustainable factories, both for workers and for the environment. Our commitment to sustainability. We have started a sustainability journey, which is actually becoming more and more concrete for us. We have a vision for sustainable growth, embracing the planet, people and culture. We have a climate strategy which is quite bold, and we integrate high-profile ESG experts in the company's board of directors. Investment in people and technological infrastructure. We will proceed in investing in people and technology, which is a key enabler. It is fundamental for young people and for production in particular. We will keep focusing on diversity and perspectives. We hire and nurture new talent. We want to focus on our clientele with advanced state-of-the-art policies and strategies. Let now come to our medium term targets. Thanks to the strengths of our brands and our industrial know-how, we quickly went back to growth, with retail revenues that are higher than 2019, starting from the first quarter of 2021. We can look back with pride, with the strength of long-term investments in our brands, in our supply chain, in people and culture. For these reasons, we can look ahead with a lot of optimism to a future of sustainable growth. Our target is that of reaching EUR 4.5 billion of revenues and an EBIT margin of about 20% over the medium term. In the next presentations, we will go in further details, and we will look at the drivers we'll exploit and leverage on to reach those targets. Let me now come to the importance of the control and distribution and customer experience for our strategy. Focusing on direct channels is delivering good results. We have already retail penetration, which is nearly 90% of overall revenues, and this choice was very beneficial for customer relations, full price sales, and as a consequence, we also posted growth of the gross margin. The online channel increased from 2% to 7% of retail revenue, and we have increased store productivity, despite many of them having been closed during the COVID pandemic, which still had an influence even in 2021, in particular in January and February. We will keep controlling the development of the wholesale channel. Now looking ahead, we will keep implementing the following actions. We'll keep a high level of attention on store productivity. We will optimize retail networks with selective openings in the geographies that have the highest growth potential. We will still create new retail pop-up stores, especially in-store installations in high visibility locations. We will double our e-commerce presence. We believe penetration will be 15% of retail sales in the medium term. We will further develop our databases and our artificial intelligence system in order to design personalized customer strategies and optimize operations. As far as wholesale is concerned, we will keep a controlled presence in the wholesale channel. Let me now come to the role that our stores play. Even in a digital era, we do have a fundamental role in our stores. They are fundamental in communicating brand vision, and we pioneered epicenters. The first epicenter store opened in New York City. It was designed by architect Rem Koolhaas, and we opened it with Mayor Giuliani. Mayor Giuliani in attendance on December 14, 2001. It was originally scheduled to open on September 18. Of course, one week after 9/11, we had to postpone the opening of the store. All of our local offices, all of our engineering resources were actually sent over to help with the Ground Zero situation. We opened the epicenter store in December 2011, and we were pioneers in also making sure that people could use virtual intelligence systems in the changing rooms. We went on to open in Tokyo in 2003 with architects Herzog & de Meuron. In L.A. we opened our epicenter with architect Rem Koolhaas in 2005. Finally, in Tokyo in 2015, we opened the Miu Miu boutique in Tokyo, Aoyama, with architects Herzog & de Meuron. Now, we have an objective of increasing sales density by 30%-40% in the medium term. We are going to reach that goal working to increase traffic in the stores by means of using pop-ups and special installations. We want stores to be a contact point within the omnichannel experience. We will focus on engaging and building customer loyalty and personalized activities. We will actually invest in personal training. From sales assistant, their role will evolve into that of a client advisor, and we will empower our sales associates with high-tech systems. We think of expansion and optimization of retail networks, and we will continue to optimize and develop the existing retail networks through selective expansion. In the United States, the distribution of wealth and demographics have changed significantly in recent years. The Prada Group doesn't yet have stores in cities like Atlanta, Austin, Baltimore, and more. We will think of many new opportunities coming up right now. In Europe, we will optimize the existing stores network, and we will continue with selective expansion. In the Middle East, we'll keep expanding in the new malls that are gonna be built in the next few years. Asia will still be the main growth driver. Once again, we will extend our distribution network there. This was all for my presentation, so thank you for your attention. I'll now yield the floor to Alessandra Cozzani, who's going to talk more in detail about the Prada brand. Thank you. Thank you, Mr. Bertelli. Good afternoon, everyone. I'm Alessandra Cozzani, Prada Retail Director. Before my section, I would like to introduce a brief video where Mrs. Prada and Raf Simons communicate their vision. Thank you so much for being here. My first question is on your relationship as the co-creative directors of Prada. How do you collaborate together? How do your talents come together in that role? Well, first of all, it all starts from dialogue. I have always been fascinated with the thought process. One way or another, I always found a uniqueness, which in my opinion, could only come out of a unique way of thinking, a unique approach towards fashion. The different approach can also reinforce the ideas. The process starts with a dialogue, in any case. It's not something that I think that you can do with anybody. I probably couldn't think about anybody else I could do that with. We always have ideas, that's why the dialogue is so crucial. I think that because the world is so much more complex, so much more vast, the subjects are so many, alone you can't handle it, the whole. We are two, but after there is the company, so the exchanges are much more relevant today because you have to face a much more complex world. Until a certain point, it was clear which were the forces and how the world worked. Now it's not like this anymore. Since the world is all connected, all in a sudden you have in front so many races, so many, religions, so many different histories, and so how you can embrace them all? In that sense, the dialogue is even more and more necessary. The way the world is in dialogue with each other has changed so much anyway. Not that I think that was the direct reason to start this collaboration in this way. No, no, definitely not. I do think that it is something to take into account these days. Kind of a plurality of creativity to reflect the plurality of the world in a sense. Yes. Somehow, yes. Two minds somehow is better than one. Our future depends on how good we are in translating in reality our ideas. The translation of the ideas into reality is where all the effort of working comes out. Another strength is in this ever-evolving fashion industry, that although we both have proven that we can carry the weight of a design position all alone, I do think it's a strong reinforcement that we carry that weight with two people. I am, of course, confident that we can translate our idea into a reality, and I hope it's good for the company because I hope we are intelligent enough and good enough. It's a very comforting feeling because we both deal with other things as well. Miuccia has Miu Miu and the foundation. I have my own brand. I think it's definitely something worth mentioning. I find it also very fascinating when I have an idea that I find strong enough that Miuccia even reinforces it. Where when you have another person with you, that person might still add or change or twist and makes it even stronger. I wanted to ask, what does luxury mean to you in fashion today? How would you define modern luxury? Until the nineties, even later, I refused to answer to this question because already hated the word luxury. All the clichés of luxury, I don't like. I like beauty. I like great stuff. I like incredible quality. I like all the content of this luxury word. While for me, it's being in the world, looking at the world, loving the beauty, which is a word that for me is very important. The beauty is both physical and moral. To achieve that, you have to get great material. You have to go through a long process of research, of thinking, of working, of reworking. The process for doing beautiful things, I say beauty in the most noble term, it's a long process, and that is what is meaningful. Now, the fact that you're trying also to be sustainable, it's another layer of commitment, and mainly to look at the world. I think that is the way I work. It's more that I have a vision of the world, and I introduce the vision of my job in that wider aspect. Also, the fact that now we live in a moment where everybody's everywhere, the confrontation of the big public make you feel more responsible. The beauty of what we do and the price then of what we do, it's for a small group of people, and that is what sometimes make me uncomfortable. That is because to do beautiful stuff is expensive. How do you feel you translate those ideas of luxury, those concepts of luxury? I have ideas, but I never start thinking about having to do a luxury product. Actually, the opposite. I think about making something that is relevant for people that makes sense. When I talk about object instinctively, I do luxurious things. I like beauty. I like the work I do, so I'm happy to do it and happy to try to display the richness of what it means, luxury. That is not something expensive to show off. That is something that deeply helps you to understand the world, valuing the work of the people. That could sound rhetorical, but they are good values. The process is natural, so it ends being what is defined by many people as a luxury product. For us, it's a natural evolution to come to that point. You know, you just make it the way you envision it, and then it ends being a luxury product. Miuccia Prada and Raf Simons, thank you so much for your views and for your insights, and thank you all so much for joining us today. Thank you. Thank you to you. Thank you. Thank you to you. The Prada brand DNA is unique. Prada has meant thinking fashion that inspire thought from its conception, and this is in all the brand aspect, from product to retail concept to ideology. There are three pillars specific to Prada DNA. The brand. Prada brand means intelligence, curiosity, and super luxury, reinvented luxury, and superlative and aspirational. The product. Our product are always unique, as demonstrated by the example on the slide, which are still relevant iconic. Finally, the customer. The customer is the center of what we do. Thanks to a customer-centric approach, we will be able to have a following global community of sophisticated customer who continue to inspire us and keep us engaged. On the next three slides, you can see what we call Pradeness, which embodies the values which I just described, and is the very essence of our brand. Radicalism, challenging convention, pushing boundaries, changing outlooks. Authenticity. Prada is honest and real, with a universal value, and connected with the present. Duality. Prada is never one thing. Designs always represent a dialogue, creating paradox that are bold and fresh. The Prada brand has evolved and then grown significantly since 1913. In this slide, I represent our key milestone over the last century. As you can see, the brand has gone through a truly impressive journey from 1913, which was the year when Mario Prada, Mrs. Miuccia Prada's grandfather, opened the first Prada store, until today, when the brand is led by unparalleled creative direction of Mrs. Prada and Raf Simons. We are on a growth trajectory, which is delivering excellent results for our brand. The Prada brand saw impressive level of growth over the last months, with revenue for the first 9 months of the year reaching EUR 1.9 billion, above 2019 levels. We experienced the growth across all product categories this year and all above 2019 levels. Growth come mainly from U.S., Asia, Middle East, where we continue to see an increase of local consumption. Strong local demand. Also, favorable trend in Europe, which has been improving over the period. We have also reinforced our direct channel offering. The brand was able to experience such a growth, thanks to three levers, which have been a fundamental part of our business strategy for years. Our continuous focus and investment in our brand, product, and customer care have ensured that Prada brand remains unique while constantly growing. The brand maintaining the fashion and cultural leadership, thanks to our strategic actions. We grow our product offer across all categories, yet maintaining a balanced product mix. We continue to experience a fast growth in new customers, driven especially by Gen Z, U.S. and by U.S. and Chinese customers, while consolidating our existing relations. We were already focused on creating shows which reflected the unique experience of Prada brand. The pandemic accelerated our approach to this and allowed us to think even more deeply about emotional engagement and the role of luxury brand during such terrible time. I'm happy to say that our thoughtfulness and innovative spirit was well received, as our show reviews have continued to be outstanding before and during the COVID, as well as following our most recent show, which presented a new format never seen before in the sector. In fact, our most recent show, the Prada Spring/Summer 2022 Womenswear show, was the first ever show presented at the same time in two cities, Milan and Shanghai. As you can see here, the initiative was well received by the press. The successful reception of the show was strongly reflected online. Not only the show received the most earned engagement across Milan and Paris Fashion Week, it also doubled its closest competitor and experienced an overall +115% growth in video views across digital platforms. For example, as you can see in the slide, we have enjoyed impressive growth in brand awareness and engagement across the major digital platforms worldwide, as well as confirming our leadership in the world's hottest brands. According to Interbrand, +20% value in Prada brand. Lyst has recognized Prada as the number one most searchable women's product, and in the top five hottest brands. The magic of Prada brand also came from its truly polyhedric approach to creating products that resonate across generations. As mentioned before, our products cover heritage and classic, modernity, sportswear, fashion vanguard, which means Prada always caters to a wide group of existing and new customers. Our product are also iconic because they have always embodied our past value, while making them modern, exciting, and new for the present, relevant for the future. Prada brand is consistent. As you can see from this image from the 1988 advertising campaign, that this look as modern as contemporary as today campaign. No. Another example of how our brand is a leader is our Linea Rossa collection. Prada was the first brand to explore blending luxury and high performance sportswear. This started in our iconic Linea Rossa, which was born in 1997, at the same time as Luna Rossa participation in America's Cup. I am exciting to share our ambition to build a global beauty house by adding makeup and skincare. We have already launched a partnership with L'Oréal and the Luna Rossa this year in September 2021. Our objective is to double global market share in fragrance by 2023. Another ambition is to reinforce Prada Group position as a leading group in luxury eyewear. Sorry. Through innovation and sustainability which we plan to achieve by continuing to focus on product development in sun and optical segment, ensuring a close alignment with other core fashion categories. We are also excited to explore new opportunities in home and fine jewelry. I will now leave the floor to Benedetta Petruzzo to talk about Miu Miu, and thank you so much for your attention. Thank you, Alessandra. Good afternoon, everyone. Let's talk about Miu Miu. In this section, I would like to give you an update on the brand, on where we are today, how we got here, and most importantly, where we plan to go in the future. Using the words of Miuccia Prada herself, Miu Miu is immediate and reflects her unique and distinctive vision. In telling different chapters of a unique story in the last 28 years, Miu Miu has gone through an emancipation journey. The brand equity in those years, though, has never been compromised, and this is where we started and decided to take a turn. I'm going to speak about an overall transformation that the brand has been experiencing in the last month. Before going into the initiatives that we are undertaking, allow me to take a step back and speak about Miu Miu Foundation and the key steps of our emancipation journey. Miu Miu expresses the heartfelt point of view of Miuccia Prada, and has a clear brand, product, and customer DNA. The brand, Miu Miu, is a universe of exploration which reflects the complex and unconventional character of the women behind it. Taking its name from Miuccia Prada herself, Miu Miu is playful and personal. Most importantly, Miu Miu empowers women. An apparent lightness belies its pioneering and fiercely feminist stance. The product of Miu Miu is immediate, breaks the rules, and is irreverently sophisticated. The Miu Miu woman is a rebel. She is empowered, she's brave, she's free, and most importantly, she's youthful in spirit. This means that Miu Miu doesn't have a specific target in mind, but we speak of an attitude, of a connection in between Miuccia Prada's vision and the community. A community because the Miu Miu woman is part of a group of like-minded souls, what we call the Miu Miu Club, united by the love of fashion and culture more broadly. How did we get there? This journey, this emancipation journey, starts in 1993 when the brand is founded as an experimental alternative vision of Miuccia Prada expression. Miu Miu opened its first store in Via della Spiga, Milan, immediately followed by Paris and New York, SoHo. This international flair is an important character of the Miu Miu brand, and allowed the brand to showcase the collection in Milan, in New York, in London, before heading into Paris Fashion Week in 2006. The mid-2000s marked an acceleration in our growth, and the first store in China was opened. In those years, important formats like the Women's Tales, the Miu Miu Club, but also more recently, the Miu Miu Select became part of our DNA. Today, we are a truly global outpost of modern femininity, a total look brand that continues to connect with a broader audience of women in a meaningful way. Upcycled by Miu Miu, our recent project, speaks about that too, but we are gonna talk about it later. This leads me to where we are today. Yes, looking at the first nine months of 2021, our overall performance remains lower than 2019. There are several strong trends that are important proof points that indicate the strength, not only of our brand, but also of our growth path. First and foremost, we are greatly encouraged by the results we are seeing in Asia and Middle East. U.S. full price retail sales are also strongly accelerating. Ready-to-wear is a clear success, and we have seen an outstanding performance, double-digit growth, with a strong acceleration of accessories as a total look brand. Our strength and channel mix promotes a higher control over the brand. A result of it is the fact that we have full price resales improvement, as well as an outstanding triple-digit growth. In terms of consumers, we have a robust millennial and Gen Z customer base that, as you all know, are the segment that are the most important in this market. Let's now discuss about the future and about the strategic lever that will sustain our growth strategy. In order to unleash the full potential of Miu Miu, we will work on a set of specific initiatives that have already been activated in the last 18 months. I'm gonna speak about three areas again, brand, product, and customer. Brand. The Miu Miu brand will expand and grow, thanks to investment in brand awareness and consideration, so the upper funnel. Miu Miu is a strong, clear, and distinctive identity, and we will make sure to seamlessly execute this identity across all the touchpoints. We will continue to cultivate desire and sustain brand equity in the long term around the concept of club and women identity. Our product will become more established, creating an ideal wardrobe for the empowered women. We will maintain a strong DNA, reinforcing the ready-to-wear and accelerating accessories, covering all offer segments. This means price points, occasion, and subcategories. Most importantly, we will maintain the DNA of being immediate through seasonal drops and special projects. Finally, the customer. We will win more customers. We will continue to fuel the base of Millennials and Gen Z, but we will also enlarge the club through an expanded reach, through communication and footprint, but also through a Miu Miu customer journey, which is playful and experimental, and through consistency across all the touch points. As I said, the execution of those strategic pillars has already started. The Spring/Summer 2022 fashion show was very well received and was defined one of the strongest and most exciting fashion statement of the season. Another important point was that it was recognized the ability of Mrs. Prada to subvert the norms and connect with the younger customer base. With the objective of connecting with the larger and more engaged customer base, digital and offline melded, and this was brought to a next level with the Gen Z artist, Meriem Bennani. This was very well-received because, as you can see on the left side of the slide, we ranked number one in earned engagement in Paris Fashion Week. On the right side, you can see that there was a +72.6% impressive growth in YouTube views versus Spring/Summer 2021. The investments and innovative communication strategy we are executing led to increase the awareness of the Miu Miu brand with growth in website traffic, search effectiveness, but also fans growth on Weibo, which, as you know, is a very important social channel in China. Our product strategy is key and will remain key. As I said, there is a specific objective for Miu Miu, which is to be immediate and meeting the moment. In this context, we launched, at the end of 2020, Upcycled by Miu Miu, an important project around a more sustainable product life cycle that was extended to the collaboration with Levi's in April 2021. The concept of reworking existing pieces was extended in spring/summer 2022 with the collaboration with New Balance around the 574 sneaker. Being immediate and maintaining a strong point of view is key, and we can see this from the last fashion show, not only ready to wear, but seamlessly executed across all product category. We will continue to crystallize identity and making sure that the complex and unconventional point of view of Miuccia Prada is consistently articulated toward the consumer. As I said, we have already started, and we are well aware that the market ecosystem has profoundly changed. The customer has to be at the center, and this page shows clearly how much all the touchpoints towards the customers are coherent and meant to engage digitally and physically with the Miu Miu club through press, social campaigns, pop-up in stores, windows. To conclude, we have a clear and solid plan to unleash the full potential of Miu Miu. The turnaround has started, is on track, and is already bearing fruit. Miu Miu is a priority for the Prada Group. We have planned EUR 150 million in communication in the next three years. The product strategy that meets the now has been activated and will be executed through seasonal drops, special project, coherence with brand DNA across categories. Millennials and Gen Z, the objective will be to stay relevant to those customer segments, but also to grow the Miu Miu Club, recruiting and nurturing the customer of the future. Thank you, and I leave the floor to Lorenzo Bertelli. Good afternoon to everybody. Thank you, Benedetta. Today, I don't want to bore you too much with our marketing platform and with too many technical data or digital data, so I will bring you quickly through the presentation, touching some key element. There are three main areas where we approached. That one is to have more and better communication for the consumer, so with the consumer in mind, and this is the second area. This is all being possible, thanks to our acceleration in the digital transformation. We're gonna see each of them. More communication, what does it mean? We invested compared in 2019 +25% in terms of budget, but as you can see, it's been improved by more than 80% the digital spend. This is what does it mean. Doesn't mean that we want, let's say, give away the non-digital investment, but simply that we have more platform, more digital platform. The behavior of the consumer, and especially the younger generation consumer, is changing, so we need to tackle that and remain relevant across the whole platform, across all consumer, and across the whole competition. But what does it mean more investment in communication? To do so, we need to keep in mind that we do it for our consumer and for our customer. With this in mind, we evolved our clienteling evolution. It's evolved in the sense that it's more personalized, thanks to other tool that we're gonna see later. This is all done with in mind the human touch, and to bring this human touch to full potential, this is fundamental. Why the human touch is so important? If you look at this slide, the human touch, the boutique staff in particular, usually, thanks to our survey that we ran in the past year, is four times more relevant compared to other touchpoints. We are not going to disclose all. This is why the feeling that the customer has, why he goes in the store and how the sales associate behave with him, is so fundamental. We analyzed this, and thanks to several activities that we put in place, we improved the NPS compared to 2020 by 15% across all the brands, and this I think is a remarkable result. How we improved the NPS? In 2015, already before I joined the company, there was a clienteling app that back in the time was, I would say, already quite an advanced tool compared to what was present in the market, also compared to other competitor. When I joined the company in 2017, it was not so updated, and we were lagging a bit behind in terms of capability. Now after a lot of refresh of this application and other tool, we are able to have a single customer view. We do personalization thanks to the AI-driven recommendation. We give tasks to client. We really give to our sales force a really powerful tool in their hands, physically in their hands. Those engagement is increased by 67% compared 2019 and 2021. I wanna add a point that is not present in the slide that the increase of the sales compared to 2019 to the present day, 2021, 20%, more than 20% of it has been driven by those activity. All those achievement and all those improvement are happening across the whole range, the whole range of age generation. For sure, baby boomers and Gen X are improving, even if generally is normally diminishing the share. The strength of the improvement that we're doing in Gen Y and Gen Z is incredible, and we are happy and proud of the performance we're having because we are back in on track on the average of the sector. I think everything is moving in the right direction. Which are the enablers to do all of this? For sure, the e-commerce, all the online channel, the whole omnichannel strategy, to integrate the online channel with omnichannel. A customer, when goes in the store or in an e-commerce store, doesn't have to notice the difference between one or the other channel. I know what you're doing in the physical store, and I also know what you're doing in the online store, in a way also the client service is able to really see just one person. We leverage the data. We're gonna talk later, slightly. Thanks to a best-of-breed approach, we leverage our IT architecture and AI to deliver all those capabilities. The performance. Thanks to this massive effort from the company, we improved from 2019 the online sales by 5 times. Now we are 5 times the our sales are 5 times bigger than 2019. The share of the mix compared to retail sales moved from four, more than four times, today, from the 2019, and we expect in the midterm to double it and so to really be in the average of the sector and, yeah, to be in the average in the sec- of the sector. Just one more point I wanna pause on the footprint of our online capabilities. We are present in 33 countries. That is quite a big numbers. Our next objective is to optimize the prada.cn. We are really focusing on building a strong team in China because, as you know, China is a kind of a different ecosystem. We want to reach the full potential on Tmall, and then we have to expand and consolidate the existing platform and in case explore new opportunity. Another point that I want to point out is that I think the company's been, in the past, thanks to my father's vision, ahead of its time. Even we've been criticized because we were not up to date in terms of digital transformation, but the vision of my father was we need to fulfill e-commerce sales through our stores because I don't want to invest in warehouses or additional stock. This, I think, has been a clever move that now is paying off because everybody's moving to this strategy, but this is the most complicated part of the strategy. Now to fulfill the bigger demand of e-commerce, we need to invest in regional warehouses that were already in place. Thanks to algorithm, we are able to better fulfill our needs and give us really an agile platform also in terms of fulfillment. To recap, this has been our roadmap, so what has been done, what was in the past, in 2019, what is today, and what is going to be in the future. We have a singular customer view. In 2019, it was fragmented. You have to pick the information from the customer from all the different platforms, and now it is just in one place. It's very easy to take those information and use as you wish. In terms of omnichannel, in 2019, we had just pick-up in store, book an appointment, in-store availability check. Today, we have home delivery, remote order, virtual appointment, omnichannel return exchanges, and omnichannel gift card. Those capability put ourself really in the peak of the pyramid in terms of digital capability. What I say to my team, from now onwards, we just ready to have fun and to unleash our creativity and really shape the future omnichannel experience. We're confident also in the future, thanks to the quality of the data. 93% of the in-store transactions are identified. This is a very high target for our sector. We know about transactions, website behavior, client advisor interaction inside, NPS, after sales, stock and data, and so on. The data culture that we have in this company is second to none. We have more than 10 years of information that has been digitized, and we can leverage to create a better performance. The redemption rate versus the non-targeted one, thanks to AI, is increased by two and a half times. The product engagement versus the one not personalized, thanks to the AI, is increased by 50%. We are not happy where we are today because we want to really lead the conversation and be the best of the best. We're planning in the next two to three years EUR 80 million of investment to even accelerate and be ready for the future challenge. We have in mind a really agile platform. This platform has to approach three main areas. The most important for sure is the front end, what the customer sees. It's not possible to have a great performance for the customer, a great experience for the customer, if you don't have an omnichannel orchestration that works properly behind the scene. Even more important, we are working with Massimo Vian to really set the new ERP system in a way to fulfill whatever we want in the future customer-wise. I thank you to everybody. I leave the floor to Massimo. [Foreign language], Lorenzo. Massimo Vian, Prada Group Industrial Director. Let's now quickly deep dive on what our CEO just anticipated few minutes ago. First of all, we firmly believe in our vertically integrated model. We design and develop in-house all products in all categories. We own 23 manufacturing sites, and we have long-term partnership with strategic suppliers. This year, despite the initial difficulties of Q1, we've been able to add 100 people to our Italian sites, and we plan to more than double the number next year. Starting March, when we had the opportunity, we also reactivated Prada Academy. Out of those 100 new employees, 40 were new apprentices coming directly from school. They will be again double next year. In the past 3 years, we invested in the industrial supply chain EUR 80 million. Thanks to our very solid financial position of today, we're planning to invest almost the same amount only next year. We are active to grow organically, but also we are ready for further non-organic opportunities. We are growing not to get more solid, but also to enlarge our vertical model. We want to go upstream in the value chain. One example, above all, is the very recent acquisition of 40% stake in Filati Biagioli Modesto. It is one of the Italian leaders in fine yarn production. This is a quite crucial acquisition from our point of view. We did it together with Zegna for our luxury ready-to-wear division. Product operations are getting more solid, but we know we have to get leaner at the same time. Last year, we were forced to slow down activities in distribution, and therefore, also in product development. In those months, we were able to maintain a positive approach, and we took it as a challenge. We proactively took the opportunity to look at our collection architectures, and definitely we found opportunities to remove complexity from our system. In 2021, we maintain an obsessive attention to introduce new style to the market. As you can see from this chart, we've been able, in less than three years, to reduce by 30% the number of new models introduced to the market. This is true across all categories. We want to keep this momentum, and we do have room, and we do have plans to reduce further in the next year. Positive outcomes are obvious, and will have definitely, thanks to this simplification, an important impact on our business. For sure, it will enable us to have more targeted communication and hopefully higher sell-through of our products. Overall, it will help us to reduce furthermore our inventories, and we will reduce also our industrial and manufacturing complexity. As you can see on the right-hand side, our average manufacturing batch has already increased by 20%, and our variability of raw material usage has decreased 35%. These improvements, from a transformation point of view, are very relevant, and all these of course translate in cost efficiencies and will contribute to a higher gross margin for the group. In the past years, actually, starting from the origin, from the idea of Mr. Bertelli, our operations, industrial operation, has been stronger and stronger. We are convinced that we are the best in what we do. Therefore, we're constantly investing on our own assets and moreover, on our people, our maestros in our factories. We're well ahead in the process of insourcing all the activities in our own plants. We employed and trained workforce to retain our critical know-how. Today, we can say that we are quite proud to have our secrets. In the pie charts, you can see the journey that is taking the group to the situation of today. We are performing 100% in-house already today, prototype and samples production, the leather cutting, leather kits preparation, the finished good quality control, and of course, the distribution. In the central activity, the one that is related to assembly, we are, let's say, 40% of in-house operations. We are planning to grow there, but not to grow above 60%. This is a very high labor-intensive activity, and it's quite safe to allow some flexibility relying on long-term relationship partners. Of course, to insource those product, you know, under our supplier base has been under quite tough screening. In the past three years, we performed more than 170 audits for our suppliers, and as a consequence of those screening actions, we ended the cooperations with 30 of them. In addition to people know-how, another critical resource in our business is time. The way we launch new products to the market is constantly evolving with more and more frequent events in our stores and a higher number of pop-ups. We have to be more precise in product delivery dates and therefore faster in our supply chain. I have to say, even thanks to COVID, we went through a massive evolutions on our operations in the past three years. We reviewed the way we plan for raw materials and semi-finished components, the way we industrialize our products, and even the way our plants are laid out. Again, the chart shows how we successfully have been able to reduce takt time by 30%. This is actual days from order confirmation to store delivery. This happened across all categories. Again, what we're going to present you today, that we have still room for quite solid improvement in the next periods. Clearly, with faster time to market, we increase our ability to react to market change preferences. For new products, it means a higher precision in store delivery, which is essential for pop-ups. You cannot deliver products not even a day after pop-ups starts. For carryover, a faster time to market means possibility to reassert the same product during the season. Obviously, this give us the possibility, theoretically, to gain extra business. This speed of the supply chain is finally also a further element for efficient inventory management and obviously a stronger cash position. Finally, we want to update you about one of our most important recent project, our new state-of-the-art distribution center in Tuscany. This project now is 80% complete and will be fully operational by the end of 2022. In the past 6 years, we invested roughly EUR 100 million to produce this new state-of-the-art facility. It has a total surface of 40,000 sq m. It has a LEED certification. It's fully covered with solar panel, as you saw in the picture. That is a real picture. It has also a geothermal system for heating and cooling. Thanks to that building, we saved 2,000 tons of CO2 emission per year, and we are able to produce more energy than we need with a total of 3 GW production per year. Final note on e-commerce is not yet in that building, but still in the older location, we've been able to reach our goal and operating our warehouse on a single shift base of only eight hours. We are able to dispatch 80% of e-commerce orders in the same day we receive them. We're very satisfied with progress so far, but even more, we have a very ambitious plan for the years to come. Thanks for your attention. I will leave you with three main takeaways. The first one, continuous investments on our vertical integrated business model. We will be very active in scouting for external non-organic opportunities in the next years. Second, we do have in front of us a journey of growth, but at the same time, a journey of simplification that will free energy to be reinvested. Lastly, think about our time to market reduction as a strong enabler for business growth. Thank you for your attention. Again, I leave the floor to Lorenzo. Me again. There is no doubt on the value of this group, on the value of the Prada Group. We need to align our business to our value, and this is my next decade objective, is to make a sustainable growth for the next decade. We need to translate our values in action. How can be done, this commitment? For sure, we have to start from the peak of the pyramid, and the peak of the pyramid is at board level. We took several action to bring aboard the whole board. We implemented an ESG strategy that is just being approved from the board of director. We have a robust engagement with the organization, with the board, and also, we have trained on ESG matters for the board member. Finally, we going to establish our ESG commitment by half of the next year. Today, the most important announcement is the two new members that will join the board, that will work with me on the ESG committee, but not only, and will help the company to better deliver result on ESG matter. It's my pleasure to present to you Pamela Culpepper and Anna Maria Rugarli, who will join the board. They have many years of experience on those matter. We think they are the right people to help me and my team and the company to address those objectives and address those tasks in the future. They come from experience from PepsiCo, Golin. The Anna Maria Rugarli, she's working for Japan Tobacco, and she's working VF Corporation and Nike before. Let's go back to our agenda. Our ESG agenda that will allow us to be really driver of the change rests on three main elements: the planet, the people, and the culture. For the planet, we have to mitigate our impact on climate change. People, we have to be champions of diversity and promote inclusion. Culture, that maybe is the last one, not least, but I think is the one that's the most related to the company, is to contribute to cultural debate, and this is, I think, the one that is more close also to my family. We have to do all those things and action with our partners, internal partner and external partner, and only together we will achieve those result. Let's see the details of those three aspect. Let's show you our climate strategy road to net zero. We start from the 2019 baseline. We just set it this year, our science-based target that has been approved, and we aim for 2022 to be carbon neutral for Scope 1 and 2 emissions. From 2026, we aim to reach our first important milestone, that is to reduce those emissions of greenhouse gases of Scope 1 and 2 by almost 30%. How? Thanks to more sustainable electricity, electrification of our plants and facilities and stores, to increase the number of green cars in our fleet, so we're gonna reach 60% by 2022, and also to have more LEED than gold- and platinum-certified stores. In 2029, we have, I think, the most challenging milestone to be reached is to reduce by 42% the greenhouse gas emissions of Scope 3. Scope 3, as you know, is all our supply chain, all the people, all the companies that are working with us and with Massimo. We are working really closely to engage them and to set the future standard to reach those goals. Finally, in 2050, to reach the net zero target, also in accordance with the Paris Agreement. Last but not least, I'm so proud to announce that, by the end of this year, we are going to end the conversion of the nylon. By 2023, all our leather will be certified by the Leather Working Group. Last, we are going to improve our packaging that is already sustainable, but we scale it up even more. Talking about people, as you know, we have several activities going on D&I topic, and we announced them in the past months, and there is more to come in the future. December third, we are going to announce other initiative with Valuable 500. On the cultural side, we're going to keep focusing on the Ocean Literacy and to educate the future generation, and we're going to partnership with the UNESCO-IOC, like we've done in 2019 for the nylon project. Thank you so much to everybody. I leave the floor to Alessandra Cozzani. Thank you, Lorenzo, and good afternoon to everybody. We have almost finished. As Mr. Bertelli mentioned before, our strategic actions are already delivering positive results, both in terms of sales performance and productivity and profitability. Before moving to Q3 trading update, I would like to briefly recap what happened in the previous quarters. We have seen a very strong sequential improvement across all geographies versus 2019, especially in U In the Asian market and in Middle East, showing strong double-digit growth in Q1 and a further acceleration in Q2. Domestic consumption was very strong pretty everywhere, and retail sales performance overall was well above the pre-pandemic level. Also, in terms of product categories, you may appreciate the strong acceleration versus 2019 in all categories, with ready-to-wear outperforming and leather goods and shoes set to follow. The strong top-line performance has immediately been reflected into profitability improvement. In terms of gross margin, in the first half of the year, we reached 74%, almost 250 basis points above 2019 level. This strong improvement, driven by a more favorable channel, geography, and product mix, is not to be intended as a one-off, but a structural improvement set to further increase. EBIT margin at 11% was also well above the pre-pandemic level, driven by gross margin, and the level of operating expenses well under control. Moving to the latest quarterly sales trend of our retail channel, you may see that the acceleration trend continued in Q3 at 18% on a two-year stack basis. Moreover, we are very pleased to see this strong sales momentum continuing in Q4 with October and November trend that is higher than the third quarter. Let me go through the sales performance in Q3 by regions. In Europe, sales trend improved significantly compared to H1, supported by local demand following the reopening of the stores. Sales performance in Europe turned positive in September and October versus 2019. Asia Pacific continued to deliver strong double-digit growth in Q3, despite renewed COVID restriction in August, mainly in China and Southeast Asia. Sales trend accelerated again in September and in October and is now as strong as it was in H1. Americas achieved another quarter of remarkable growth, up 86% on a two-year stack, despite tougher comparable base. All countries in the U.S. recorded a very strong progress. In Japan, retail sales improved but remained impacted in the quarter by the pandemic and the lack of tourism. It's worth mentioning that in October, Japan delivered double-digit growth. Sales momentum in the Middle East region saw a very strong acceleration in Q3, driven mainly by local consumption. Besides the very strong retail sales trend, also group profitability showed a very good progression in Q3 versus first half of the year in terms of gross margin, EBIT, and net profit. The net financial position was close to zero at the end of September, compared to negative EUR 102 million end of June, as a result of a strong operating cash flow driven by improved net working capital. Based on this very encouraging trend, we expect that our EBIT margin will be increasing further in the medium term. We have summarized our key pillars leading to our 20% EBIT margin target. On retail side, our priority is to improve store productivity through organic growth across all product categories, also leveraging our sophisticated CRM system and continuous enhancement of in-store customer experience. In terms of channel mix, we are currently controlling about 90% of our revenue through directly operated store, both offline and online, and we expect to go beyond this threshold. It's worth mentioning that online growth will be accretive for the group profitability. On supply chain, our priority will be industrial process rationalization and efficiency of scale. Last but not least, we have strengthened our organizational structure during the last few years, thus providing a proper set for future growth. The improvement in the existing store productivity will trigger operating leverage in the medium term. Finally, let me give you some color on our capital allocation policy. Going forward, capital expenditure will be between EUR 200 million and EUR 250 million, with about EUR 150 million dedicated to retail network, including some selective new openings, refurbishment, and relocation, and about EUR 100 million allocated to investment in production and IT infrastructure. In addition, given increasing level of net profit and cash flow generation, we aim to resume a dividend policy in line with pre-pandemic level. Now it's my pleasure to yield the floor to Paolo Zannoni. Good afternoon. I'm Paolo Zannoni, Group Chairman. I joined Prada less than six months ago. This makes me the new kid on the block. This new kid will tell you how he sees the company's path forward. Today, Prada as a brand is bigger than Prada as a business. That gives us a wonderful opportunity to grow sales and profitability. The group is focused on the long-term strengths on both brands and business, not on short-term gains, as you have seen from all my predecessor. All our investment are for the future, and they will bring an improving financial performance, but also brands that grow more powerful and relevant all the time. At Prada, evolution starts at the top. First, we added senior creative talent. It was a gutsy move, but it worked. Miuccia Prada and Raf Simons have just told you how they create together and how they are in touch with diverse people and cultures, in tune with their demand and expectation. Their joint talents fuel product innovation. Today, you have seen the division of our two main brands, Prada and Miu Miu, are as firm as they are clear. Prada is brainy, subtle, clever. Miu Miu is instinctive, playful, brave. The different vision appeal to diverse customer. Both brands have ample room to grow. We made our products richer, more unique, cherished. We freshened up the way we market our wares. The Prada Spring/Summer 2022 show was the first synchronized event, joining Shanghai and Milan. That of Miu Miu in Paris was equally original, with its blend of fashion and art by Meriem Bennani. Prada today sells through physical store, digital platforms, pop-ups, and events. Physical stores are the embassies of the brand. Pop-ups and events target narrow segments of demand. This way, we sell more items at full price and at a higher price point while keeping our core customers and reaching new ones. Today, our financial performance is better than that of 2019. Gross margin is firmly above 76%, and EBIT is on an upward trajectory. You have just heard how the group has enhanced manufacturing. The group has greater control of the supply chain, so vertical integration, improving quality, working conditions, and becoming more respectful of the environment. We manufacture in state-of-the-art facilities, lean and environmentally friendly. COVID pushed us to focus on local customers in every region. Hopefully, restrictions will soon ease. Travel will resume. Our challenge then becomes how to keep local customers while capturing those that move between cities and regions. We are not idle, and we are gearing up to face the challenge with diverse product and targeted pricing and merchandising. Changes in the demographics and distribution of people and income bring new opportunities. As you have seen, the United States is the best example. The North American market for luxury goods has been growing double-digit. Group sales have outpaced the market. Yet, in the U.S., we are still underrepresented. We will grow sales and profits there. Prada is implementing a full range of steps to be respectful of the planet, its people, and culture. To do that better, we are adding two new members of the board, both with deep ESG experience. With them, our board of directors will achieve gender parity, not a trifling achievement. I am truly confident that Prada, by being relevant, sustainable, and impactful, will achieve revenues of EUR 4.55 billion and EBIT margin of 20% in the medium term. I am happy and honored of having been asked to join the board. Now we'll get to questions. We have now reached the Q&A session. Please note this will be divided in two parts. The first part for financial institutions, followed by a short coffee break and the press Q&A. We will start by taking questions from the financial audience present in the room, followed by questions from the webcast. Please raise your hand to ask a question and the hostess will approach you with a microphone. Kindly state your name and institution, and limit your questions to two at a time. Thank you. Luca Solca from Bernstein. Thank you for your presentations today. It is refreshing to see the catch up that Prada has been producing in the most recent period. Is it fair to understand that you are continuing in this catch up, and that what you were showing today is primarily a continuation of this catch up? Is that the reason why the medium term objective that you set for the company, especially on EBIT margin line, seems to be rather unambitious when you compare such a big brand like Prada to other peers in the industry? As a second question, I wonder if there is further efficiency opportunity. You were highlighting, for example, Massimo, quite a significant improvement in complexity cost reduction and time to market improvement to reduce costs and invest more in brand support so as to drive retail space productivity. I would assume that higher retail sales productivity could boost operating profit margins well above the 20% that you were indicating today. Thank you very much. Hi, Luca. Honestly, we don't think that this 20% EBIT is underambitious with this level of sales. We didn't give you a precise number. We say about 20%. I think it's reasonable also considering the level of the target revenues. It comes mainly from organic growth. It is true that there is an important operating leverage that we need to capture. There is also some additional opportunity, as we mentioned before, in the gross margin progression. We do feel that this is a target that is reasonable. We are, let's say, reasonably confident to reach it. We like to underpromise and overdeliver. Ciao, Luca. Back to your second questions. Is there an extra margin in cost efficiencies? Maybe there will be. I don't want to say again what our chairman just said. Clearly, what we've been focusing recently and what we will focus is more to drive out simplicity and speed to serve stores and keep our inventory at the very minimum. I think we've been successful in doing that, and I'm sure we will be further next year because we have some lag of what we were doing pre-COVID. Second element is that part of the gain of the gross margin that Alessandra mentioned are coming from cost efficiency, but part of what we're going to save will be reinvested into raw materials, even more luxurious compared to what we use today, talking about mainly leather and ready-to-wear basic material. I think we've been realistic in our journey of very solid and linear growth, which is not that linear. Hi, good afternoon. This is Elena Mariani from Morgan Stanley. I'm gonna speak to two questions. My first one is for Mr. Patrizio Bertelli and also, Lorenzo Bertelli. In the past, you have been asked quite a few times, whether the Prada Group could become an industry consolidator. I think that the answer was, "We need to focus on the Prada brand first. We need to recover." It feels to me that today, you're showing that you are on the right trajectory. Do you see yourself now, more as a group, and as an industry consolidator, given that, everybody agrees that in Italy, we lack a big holding company, and there are very few groups that can actually reach that objective? That's question number one, maybe also for Lorenzo, who's gonna take over quite soon, in the future. Then my second question is again on the targets. Is it possible to put a date? Is it like a three-year ambition, which is pretty much what consensus is seeing right now, or is it more like a five-year plan? You know, still part of this question, I mean, and going back to what Luca just asked, and you also mentioned I love the sentence that Prada is a bigger brand versus you know the Prada businesses. What prevents you, in terms of size, to be more in line with the key leaders in the industry? I'm gonna mention Gucci, I'm gonna mention Vuitton. It doesn't seem to me that the Prada brand has something less than these industry leaders. Thank you. [Foreign language] Let's see. Yes, it's a very complicated story. I mean, we've been a group that has simultaneously dealt with very many aspects with a 30 years track record. We have invested on certain activities such as factories and other activities to give an identity to a young brand which was founded 30 years ago. Probably we have suffered in terms of EBIT. There are other brands instead which have higher EBIT results because they bet on the short term. We instead work thinking about the next 20 years, and this is a huge difference in my opinion. History is not something you can buy, and this is something we must all try and understand. We can work really hard with marketing, but also to create a strong brand identity. This is what we've been doing better than anybody else, for sure. As for our ambition, is it three, a five-year ambition? Well, obviously, we did not provide you with a date because we think very many things are at stake still. We will try and do the best possible, as quickly as possible. Prada is as a possible industry consolidator. Well, I don't think this question should be asked to Prada, but rather to Italian entrepreneurs. Why is it that they didn't consolidate in the past, and why is it that they avoided consolidation in the past? I think that currently, you know, it's a bit too late. I mean, we needed a different and wider vision 10 years ago when, you know, we saw the launch of iPads in 2010. That was possibly the latest date when we could have thought about the possibility of consolidating this industry. Currently, I think, at least from our point of view, we want to defend the Italian know-how. We want to help SMEs that will encounter huge problems with stronger digitalization in the future and with stronger limitations when it comes to ESG and green matters. I mean, consolidation should be a natural fact, not because you have, you know, a strong company. There should be a totally different attitude in assessing the global market as such. I will try and answer very quickly as to the point of me taking up the company in the future. Well, first of all, I agree with what you said about the group. I mean, it's not for us to consolidate the industries. There's no will from other entrepreneurs. This cannot happen. You know, there must be a buyer, a seller, and there must be the will there to do so. I mean, if chances will come, we'll assess those, but we have no anxiety in this respect, let's say. As for succession, well, in 3 years time, dad said he's going to retire, but I don't believe it. I don't know. I was asked, and I said, in 3 years time, I don't know. We'll see. I mean, it's an option. It's a possibility because we also have to take into account that I have a certain age. If we look at stats, you know, we are all aware of the fact that if we look at averages, you know, when somebody is 75 years old, stats, international stats tell us, you know, 10%-12% as a survival rate. It's normal to think about these things. It's very difficult for everybody to transform, you know, the path of a lifetime into percentages. If we all started thinking in percentage terms, we would eliminate some anxiety. I'm not anxious because my 75 years were spent very well. I enjoyed myself. I did very many things. Also this room where we are today is a demonstration that we don't take you to public cinemas or to rented hotels, but rather to our cinema. Thank you. Yes. Hi, it's Antoine Belge from Exane BNP Paribas. Two questions. First of all, when you look at the last four or five years, you've seen a fantastic acceleration. I remember that there was a period where, especially for the Prada brand, there was, I mean, some of the products had lost a bit of their appeal, and there was a question like, you know, being too dependent on a few ranges, et cetera. How confident are you that you've found the right balance between new products and evergreen products in the brand today? My second question is a bit more financial. I understand you don't want to give a sort of timeframe, but that 20% EBIT margin would correspond to what gross margin? Because I think you remember if I understood correctly already in Q3, so it was 76%. So is that like the sort of a target, not only on a quarterly basis, but on a full year basis? Or do you think that maybe you know you can get to 78% or 80%? Thank you. As to more appealing products, well, I think what we've done is we really looked at ourselves and at the way we do things and the way we think. We thought about it carefully, and we find the right way to refresh and renovate the products, the collections, and our way of working. I think it's important to have the capability to do it. It may happen, you have some slowdowns. That's life. The gross margin that is implied in this 20% EBIT is 78%, the one that we have also that Mr. Bertelli has also declared in a recent conversation with you. Hi, can you hear me? It's Louise Singlehurst here from Goldman Sachs. First of all, thank you all very much for all the information that we've had so far. It's a delight to be here in person, so thank you for that. My first question, I just wonder if we can talk about the level of transition that we've seen. I thought the presentation from Mr. Vian and talking about the reduction in production and SKUs in a very short period of time between 2019 and 2021 has been quite spectacular. I just wondered if you could talk to us about the journey of what accelerated that. Was it accelerated during COVID versus your plans probably 4 or 5 years ago to where we are today? Secondly, with regards to digital, the 15% number that you're targeting is a big number, given the absolute sales that would imply, but it's still quite low. Is that a target that can go further? Is that pure digital? We did talk about omnichannel quite a lot in the presentation, which I presume is quite difficult to disaggregate. When we think about omnichannel, does that make the YNAP proposal quite an interesting opportunity that was talked about by Richemont last week? Thank you. I would start in full transparency telling you that I joined the group 18 months ago. I join in smart working, and the first thing, one of the first thing that Mr. Bertelli presented me was a reduction plan of SKU. Who's been driving that? I mean, I think it's quite clear who was the start of that. I think what the team did well, took that really as a challenge and see what we could do after this big, you know, push, starting directly from the CEO. What would it be next? I think we did well in terms of setting up a system to control the number of new SKU being generated and to start measuring the results after this, you know, strong diet that we were forced to do. As I said before, we discovered that in some areas, I mean, we were doing even better than before with not only fewer SKU to manage in the supply chain, but feedback from retail, fewer SKUs to present to customers in the store, to have also a proper amount of time to showcase our product in the windows and in the shelves of our stores. Discussing with the CEO, we said, "Why not continuing?" Of course, we benchmark our situation with other competitors, and this is how we generate the plan that we showed you for the next years. I think that Prada will never set for itself a limit to newness to be introduced to introduction like other players they do. Prada is devoted to innovation, and we hate to talk about limit the newness. On the other side, we have to be clever and not create problem to ourself. In this respect, yes, we might have been conservative with what we showed you today, but clearly this is a very realistic plan. Probably we haven't seen so far all the positive outcomes that we could get from that results. Thank you. To answer your question, first of all, we could stay here hours to discuss about this topic, but I wanna a bit to break the cliché that more penetration of digital means you are better doing digital. For sure it gives you an idea of your level of maturity, but it's also up to your overall strategy. Let's say you have few big stores around the world. For sure, your level of penetration of the online is gonna be high. If you have a bigger physical penetration, your level online is gonna be lower. That is a customer choice, it's not a company choice, so you have to follow what the customer wants. I make this example. Let's say that in 20 years, we're gonna have company with 50% of digital penetration and company maybe with 20, and with a similar network. The overall value of those companies similar. What does it mean? It means that one company is better in driving a better physical experience than the other one, and you have better opportunity to increase the advocacy of consumer. Generally talking, generally speaking, a higher penetration doesn't mean better. It gives you the feedback of your maturity level digital-wise, but it's more the capability that gives you the real feedback of where you are. For sure, we need to improve. We are doing so, and we have clear view of what we need to do in the future, but it's going to be the customer to decide at the end. On Yoox Net-a-Porter, I don't want to comment too much what is going on in these days. For sure, Farfetch and Yoox Net-a-Porter have been the first companies facing these new challenges, and like every business has to update themselves. I think there are a lot of things going on, and I'm sure if we're gonna have nice opportunity to take, we will take it, and we will participate to the discussion. At the moment, I don't want to comment. Thank you. Hello. It's Susy Tibaldi from UBS. My first question would be on your growth by categories. I think as a group in the sector, you are quite a lot more exposed to ready-to-wear compared to some of the other groups that are very much exposed to leather goods. There has also been quite a stark difference in the growth. I was just wondering, as a strategy, if you're happy with this balance of ready-to-wear versus leather goods. Generally for the industry, the gross margin for ready-to-wear is a little bit lower than leather goods. You managed to get to 78%, which is very impressive. Is ready-to-wear not dilutive to your gross margin? That would be the first question. The second question is on the pricing, a bit of a broader question on the industry overall. I think we've seen some companies taking prices up quite aggressively, and so there is quite a big disparity now between the groups, some really sticking out on the high end. How do you position Prada, especially on the leather goods side in terms of pricing? Like, what kind of customer are you trying to target, and what's the ideal level for you? Thank you. [Foreign Language] Let's start by talking about this ready-to-wear question. The reason why we have a lot of ready-to-wear, more than others, is obviously that other groups tend to aim at EBIT more than at the brand positioning within some markets. Let's make an example. Everybody thought the European market was the sick man of the market, but actually it was the opposite. Today, it's performing really, really well because consumers went back to the stores. It's quite evident that in individual countries like France, Spain, Germany, and so on, people's interest towards ready-to-wear has been particularly strong. I think our balancing is correct. 60% leather goods in general, including leather goods, small leather goods and accessories. 22% roughly ready-to-wear, and 18% footwear. This is a balance we've always had in the past. Actually, in the past, leather goods were. When I say in the past, I mean before 2010, before the IPO. Leather goods were even lower than that in the past. This is a part of our know-how and our identity. We don't want to lose touch with ready-to-wear. Ready-to-wear is all about lifestyle. We don't want to reach beyond any specific level there because we believe this might be detrimental for the brand identity. Of course, it's not necessarily said that leather goods have higher profitability. You also said it. I mean, we can go as high as 78% gross margin with a lot of ready-to-wear too. It's not necessarily said. You were asking about pricing on leather goods. Well, leather goods pricing may actually vary quite substantially depending on what kind of segment we want to penetrate, so there's no single price point we have in mind. Depending on the products we're talking about, we think we may allocate price positionings and price points quite well, depending on the market needs and the customers' expectations. Thank you. May I answer your other question on higher prices? Sorry, higher compared to the peers. I was forgetting, sorry. Prada has a lot of room for maneuvering. We can easily get up to 78% gross margin. Thank you. This is Flavio Cereda from Jefferies. I have really quite a simple question. The process of efficiencies that Massimo Vian has gone into some detail on, how much of a catalyst was the pandemic? Without COVID, in a meeting today, would we be looking at the same targets, or did it spur you on to significantly accelerate the process? Thank you. [Foreign language] Well, I must say the pandemic has been a tragedy for everybody, for everything we're all aware of course. I must say that this moment we all had to go through, which has been constructive to a certain extent, for our company. You know, we thought in our homes all the things a lot. We looked inside ourselves. I certainly think that the pandemic has somehow accelerated certain choices, such as that of deciding to use certain specific systems rather than others. It has helped people continue having a non-physical relationship with others. This will be an important benefit coming from the pandemic because we all went much more digital. This, you know, unpleasant stop we had to suffer with all the disastrous consequences has been somehow also an accelerator. I would say that we ourselves, having to review and re-examine our past to move to the future, have come to decisions we are examining together here today. You now see the effects of the work that has been done, and which had already started in 2019 and just slowed down given the situation. Basically what we had already activated at the end of 2018 and beginning of 2019 then stopped or slowed down considerably in 2020. In 2021, we continued along what had already been decided before. Thank you. I think that this was the last question coming from the audience. We now would like to take some question from the webcast audience. Thanks. The first question comes from Chiara Battistini. And it is. There are two questions. The first one is circular economy going to be a key pillar of the ESG strategy? Do you want to reply this? For sure. Circular economy is going to be one of the element part of the ESG strategy, but we have to keep in mind what is our business model, and so sustainability means sustainability in all sense of economics, and for the environment. We want to bring as much effort as possible according to what is realistically feasible. The second question is again for Lorenzo, I think. It's about marketing. Your Shanghai market takeover received a very good feedback. Can you tell us how is the Chinese marketing team organized? It has the head of marketing China, local or an expatriate. How can you make sure you keep on localizing the marketing effort in China, especially given the new government's scrutiny? Yeah. I think the basic principle. I think if we think about the beginning of this in the 2000, we didn't have smartphone, we didn't have Zoom, we didn't have a lot of tool that allowed us to the world to be smaller, you know? I think now we have powerful tool, and we should take advantage. The organization and the governance of the company that we have today in a lot of situation are very close to that kind of environment. Today, we have to take advantage to those tool to have better agility and more a shorter time to react and a shorter time to market. I think that the governance and organizational structure should be more. This is generally talking for marketing, but only more point to point. We don't want to have intermediaries between us and the market. We really need to shape ourselves to be directly connected to the market because otherwise you lose a lot of information. We're working to strengthen the team there, but there is every week a strong governance discussion between the team there, like if they were seated in this room. Honestly, it's just a virtual expanded room. I would not say that there's going to be independence in the sense they will be able to do whatever they want. It's just a close, a working, let's say, working table close to them where we discuss every week of the opportunities. But for sure, then you need strong people there because you need to understand what is the market there. This is more or less how we think is today. I think we should be tomorrow even better than this. We have a couple of questions from Thomas Chauvet from Citi. The first one is, the 78% gross margin and the 20% EBIT margin target imply a cost of sales ratio in the high 50%, well above historical and industry peers. What is driving such big cost inflation in the next few years? Honestly, we have, of course, an inflation rate in the operating expenses in this plan. But it is not a big inflation rate. It's about mid-single digit increasing every year. Because there is a pressure on costs that we are living in this moment. There are some uncertainty. Also, of course, we need to strengthen the organization, and we have seen... We need to invest something also in marketing if you want to fuel this kind of sales. There is an element also of variable costs in our P&L that can of course have an impact on operating expenses. The second question is. You have not mentioned Church's and Car Shoe today. What is the future of these brands in an increasingly competitive footwear market? Are they still core to the group strategy? For Church's, I'd like to remind you all that the factory is in the U.K., was in the U.K. You know what happened in the U.K. You know the factory was closed for six months, the market and stores closed for more than eight months. So it was obviously a very negative situation. It's obvious that we are interested in continuing with Church's and Car Shoe, a smaller brand. In the situation of the pandemic, they suffered the most, right, because Church's sales were mainly localized in the EU market, in the European market. The other question comes from Mavis Hui from DBS. The first is, with an increasing amount of customer touchpoints, how do we strike the best balance among flagship store, pop-ups, online events, campaigns, and other touchpoints? The second is, we have seen the best gross margin from leather products and bags in holidays. As we have done extremely well in ready-to-wear in recent years, do we expect to redeploy more efforts and resources on the leather bag segment so as to accelerate group margin expansion further? I take the first question. Yes. The first one, I mean, yeah, they're increasing. Related a bit to what we were saying before, how you put in place your governance process within the market. You simply have more jobs to do, and you have to handle it. That's it. There is no plan B or a shortcut. You have to do more and better. It's about a recipe. You know, that will shape accordingly to your strategy. It's like if you have to do a recipe with few ingredients, it's easier, but maybe it's not tastier. If you do a recipe with more ingredients, it's harder, but maybe it's tastier. I mean, it's just more ingredients. I don't see any problem. We just need to handle it, because I mean, I don't believe there are too many. I mean, it's like this, and we will handle it. I read again the second question. We have seen the best gross margin from leather goods products and bags in the heyday as we have done extremely well in ready-to-wear in recent years. Do we expect to redeploy more effort and resources on the leather bag segment so as to accelerate group margin expansion further? Yes, definitely we are investing to improve our business in leather goods. We are also working on the product position because we want to improve their gross margin. The work we've done on ready-to-wear is something we are actually replicating in leather goods as well now. On the other hand, as far as footwear is concerned, we had already achieved a good positioning and a good average price point and gross margin position in the past. Third question is, about what proportion of our group revenue currently comes from the 23 directly owned manufacturing sites, and what will be the optimal proportion of in-house production in the medium term? As I said during the presentation, currently, let's focus on the high labor intensive assembly operations. 40% of what we do come from our 23 plant. This is more or less the right value for leather goods, 40%. That percentage is far, far higher for shoes that are deeply insourced, and is lower in ready-to-wear. That is divided in many, many categories with many, many merchandising type of products. We are highly integrated in shoes, less in ready-to-wear. Best percentage will be 60%, around 60%. The other couple of questions come from Liwei Hou, not sure if I'm pronouncing well, from China International Capital Corporation. The first is, could you share more detail on your physical store expansion plan globally and particularly in China? [Foreign language] Yes, we also need to know how the physical store expansion mechanism will be in China, because in China, we don't have department stores as we have in the U.S., and activity takes place within the malls. This makes a huge difference. When today we talked about the U.S., we could have highlighted the fact that in the U.S., we started a process of opening up stores in malls, while in the past, there was distribution via department stores. In the last few years, department stores dropped in value, and so now the distribution has changed also in the American market. Basically, malls become the center for physical distribution more and more at global level. The same doesn't hold true for Japan, because in Japan, there is still a strong distribution via department stores. Thank you. The second, do you think you will benefit more from common prosperity in China being viewed as a more subtle brand than peers? Has common prosperity discouraged vulgar display of wealth? I think, like, we should ask the Chinese government what does it mean, common prosperity, because at the moment it's not that clear. Generally, for sure it will come, like we've seen in crisis period, tendentially, big logos tend to disappear. In wealthy period, big logo tends to appear. I would say, we will tackle this like we've done in the past. Luckily, I mean, Prada is not a big logo brand, so if it's going to be the case, it's good for us. I'm not worried at all. The other question comes from Nikki Ho from Jefferies. Hello, Mr. Bertelli. Great to see Miu Miu turnaround on track. Could you comment on Miu Miu's profitability is still loss-making? What is the margin target for Miu Miu within the 20% margin target, given the marketing step up in the next three years? Miu Miu has not just achieved the break-even point, but it's actually improved its EBIT. Now, of course, in the next three years, the objective is that Miu Miu will reach the expected EBIT level, i.e., 20%. Thank you. We are gonna take the last question that comes from Linda Huang from Macquarie. Metaverse becomes the buzzword in the luxury industry, too. How would the management think about fitting Prada into this concept, and when would we see more concrete strategy? When they ask me those kind of question, I mean, Metaverse is like social, so we will end it like we've done with social. We are discussing internally since more than one year, I would say. I personally very clear I have an idea of Metaverse and what is their mechanics, so I'm not worried at all. I know exactly what we need and which are our next step, but we keep confidential for the moment. It's like social, it's just another things to be handled, that's it, so I'm not worried at all. You will see in the next future how we're gonna tackle this topic, even if, you know, now, for now it's. I mean, it's not that whenever we have a new, let's say, channel or a new place to display our product or whatever it is, you have to tackle it as soon as it comes on the market, because you have to also weigh the right level of maturity of the consumer that are there and then the market as well. I mean, we're working for a year and a half, but you know, I assure you we'll do it tomorrow. I think that we have finished with. Thank you. This concludes the financial questions of this Q&A session. We will have a short 15-minute break, after which we'll invite press to return to take seats in front rows. In compliance with COVID safety measures, we will ask attendees to exit in two groups, starting from the front row seats. We will ask the rest to remain seated as we empty the space. Note that the room will be cleaned and disinfected during the coffee break. Thank you.